Bakken Falsities

Back when North Dakota's drilling rig count was hovering around 200 rigs and exploration and production companies were rushing to hold acreage through production, there was a sentiment shared by many.
By Luke Geiver | March 01, 2016

Back when North Dakota’s drilling rig count was hovering around 200 rigs and exploration and production companies were rushing to hold acreage through production, there was a sentiment shared by experts that it was false to say the Bakken was booming. Even from the early days of the Bakken, industry veterans, analysts and planners disliked the terminology and often worked to correct those who used the word to describe the Bakken. The inherent nature of the word implied that the Bakken’s time of incredible activity was constantly running out, and that in essence, a bust was coming.

Today, with oil prices as low as many linked to the Bakken have ever experienced, the amount and type of activity in the play is vastly different than during previous years. $30 oil simply does not support the drilling and completion of new wells. The harsh reality of the current Bakken also shows that workforce reductions and difficult-business decisions are being made. But, even in the midst of such a significant activity level change, those same people that were quick to discredit the Bakken as a boom would also be fast to squash any notion that the Bakken has bust.

We have the evidence to prop up their perspective. In the feature piece, “Bakken U’s Purpose,” we covered those involved with a unique funding opportunity aimed at the Bakken’s workforce. Through a multi institution collaborative effort, several North Dakota entities have created a program specifically designed to keep the oilfield’s workforce committed to the Bakken region. As the story shows, the program will ensure the Bakken has highly skilled workers when needed and the state will have a positive path for workers to follow should they choose to pursue an alternative North Dakota career. North Dakota and the Bakken, the program’s organizers told us, has long-term potential.

A Bakken analyst from globally recognized analysis firm Wood Mackenzie told us the same thing. When we caught up with Jonathan Garrett for perspective on energy service trends, oil prices and a multitude of other trends worth understanding, Garrett reminded us of the view shared by oil executives about the Bakken. According to Garrett, the Bakken is an incredible resource, the executives say, and one that should always be looked at long-term.

Of course, speaking to oilfield workers who have been laid off or watching the state’s rig count continue to dip leaves us all feeling that the Bakken may have truly been a boom (and we know what that implies of the current state of the play). But, based on what industry veterans, experts, investor analysts and commodity price historians would tell us, we can’t let those thoughts gain any ground in our heads. There is a reason program’s like Bakken U exists. There is a reason oil executives are working hard to align their entities for the upswing in oil prices. The Bakken might be a rollercoaster (what market isn’t when its linked to commodity prices?), but at the end of the day, the resource of tight oil and associated gas present in the Basin is so great that it will continue to exist, not as a short-term economic anomaly, but rather as a long-term industry full of its own ups and downs.

Luke Geiver
Editor
The Bakken magazine
lgeiver@bbiinternational.com